Facebook settled a lawsuit Tuesday with the Federal Trade Commission over charges alleging the website changed it privacy settings without informing its users.
The settlement prohibits Facebook from making changes to personal information setting changes without the approval of its users.
The website must also allow evaluations by "independent, third-party auditors" to make sure the company's privacy settings do not violate users rights.
FTC Chairperson John Leibowitz said in statement that Facebook is obligated to “keep the promises about privacy that it makes to its hundreds of millions of users."
"Facebook's innovation does not have to come at the expense of consumer privacy. The FTC action will ensure it will not," said Leibowitz.
Facebook creator and CEO Mark Zuckerberg recognized the company's past mistakes.
"I'm the first to admit that we've made a bunch of mistakes," Zuckerberg said in a blog post on Facebook. "In particular, I think that a small number of high profile mistakes, like Beacon four years ago and poor execution as we transitioned our privacy model two years ago, have often overshadowed much of the good work we've done."
Other reports released Tuesday revealed Facebook is close to an initial public offering. Facebook is hoping the company will be valued at upwards of $100 billion.
Zuckerberg was previously reluctant toward the idea of an IPO, but has recently been more open to the notion.
The company is now in talks with the Securities Exchange Commission regarding the timing of the filing.
Facebook Chief Financial Officer David Ebersman is leading the discussion with the SEC, according to sources close to the matter.